National the economy grew at a seasonally adjusted annually rate of 1% during the second quarter of 2011, and the unemployment rate in September was unchanged at 9.1%. Extremely low growth nationally provides some explanation as to why unemployment remains stubbornly high. In order to reduce the unemployment rate, most economist agree the economy needs to grow a pace of 3% or more.

Wisconsin’s unemployment rate was up slightly, 0.1%, in August. This increase was the result of a decrease in total employment and a decrease in the labor force, providing further evidence that the economic recovery may be staling. The state grew a seasonally adjusted annual rate of 1.13% as measured by the Philadelphia Fed’s Coincident Index of economic activity, and the Leading Index is predicting less then 1% growth over the next six months. As with the national economy, this rate of growth is too slow to affect meaningful recovery in labor markets. Indeed, if the state economy continues to preform this sluggishly, we would expect to see the unemployment rate increase in the coming months.

Labor Market

While the national jobs report could have been better, there was some encouraging news. First, the change in total nonfarm payroll employment for July was revised up from +85,000 jobs to +127,000 jobs, and the change for August was revised up from 0 jobs to +57,000 jobs. Total nonfarm payroll employment rose 103,000 in September; though, the increase in employment partially reflected the return to payrolls of about 45,000 telecommunications workers who had been on strike in August. The economy created slightly more jobs than needed keep pace with new entrance to the labor force, but the unemployment rate was little changed at 9.1 percent last month. The fiscal condition of the public sector continues to way on the economy. The public sector lost 34,000 jobs in September. Moreover, concerns over low economic growth are growing.

The Wisconsin economy lost 2,300 jobs on net in August, and has gained only 24,700 jobs over the last year. The lost jobs where in several key areas in August. The public sector lost an additional 1,500 jobs; Professional and Business services lost 1,500 jobs; and Construction lost 3,000 jobs. One the other hand, the largest increase came from the leisure and hospitality sector where 2,000 jobs were created. Leisure and hospitality sector tends to be composed of lower paid jobs then the public sector, which highlights the importance of looking beyond net jobs created when evaluating economic growth. One a more positive note, Health and Education services and Manufacturing both saw increases in employment totaling about 2,000 jobs that may be higher paying.

The state unemployment rate increased slightly to 7.9 percent in August, which is 0.1 percentage points lower than one year previous. Conditions in the regional labor market are still slightly better than the state average. The regional unemployment rate decreased in August by 0.55 percentage points to 6.3 percent. This change was driven by a 0.7 year over year percentage increase in total employment and a 0.1 year over year percentage increase in the labor force. The region's unemployment rate is lower than the state average of 7.9 percent and comparable to the Minneapolis-St. Paul-Bloomington Metropolitan Statistical Area (MSA) unemployment rate of 6.7 percent.

One explanation economic performance of the St. Croix Valley relative to the rest of the state of Wisconsin is its proximity to Minnesota and the Twin Cities. Minnesota is exhibiting considerably faster growth than its upper Midwest neighbors.

Housing Market

The Case-Shiller Home Price index for Minneapolis and Chicago, as well as, nationally have shown slight increases in May, June and July, but the index still shows home values are considerably below one year ago. Median home price in the Valley is also below one year ago, but the number of homes sold increased.

Wisconsin's St. Croix Valley is comprised of St. Croix, Polk, and Pierce counties. All three counties are located along the Wisconsin-Minnesota border. Two of the three counties, St. Croix and Pierce, are included in the Minneapolis-St. Paul-Bloomington MN-WI metropolitan area, a 13-county region with of population of 3.25 million residents. For additional information on the October edition of the St. Croix Valley Economic Dashboard, contact Dr. Logan Kelly at cer@uwrf.edu or (715) 425-4993 or William Rubin at bill@stcroixedc.com or (715) 381-4383.

*Please note that most regional data is available with between a one and two month delay, thus the current month's dashboard will have data from previous months.